111AAAA Use of currency

Summary

This section provides the rules in relation to the currency used for the purpose of determining the GloBE taxes.

Details

Definitions

(1) This subsection provides for definitions used in this section:

“rate of exchange” has the same meaning as in section 79, i.e. a rate at which 2 currencies might reasonably be expected to be exchanged for each other by persons dealing at arm’s length or, where the context so requires, an average of such rates;

“representative rate of exchange” has the same meaning as section 402, i.e. a rate of exchange of a currency for another currency equal to the mid-market rate at close of business recorded by the Central Bank of Ireland, or by a similar institution of another State, for those 2 currencies;

General

(2)(a) Paragraph (a) of this subsection provides that any amount to be calculated by a group in determining the IIR top-up tax or UTPR top-up tax shall be calculated using the presentation currency of the consolidated financial statements of the ultimate parent entity of the group.

(2)(b) Paragraph (b) of this subsection provides that where an amount used in the calculation of the IIR top-up tax or the UTPR top-up tax is denominated in a currency other than the presentation currency and it is not converted to the presentation currency during consolidation, then that amount is to be converted using the foreign currency translation principles that would have applied if the amount was converted during consolidation.

(3) This subsection provides the rules relating to the exchange rate to be applied in determining if any materiality or other threshold in this Part, denominated in Euro, is satisfied. The amount is to be converted to euro using the average daily rates of exchange for the month of December in the fiscal year immediately preceding the fiscal year in respect of which the conversion is required.

(4)(a) Paragraph (a) provides the rules in relating to the currency used for the purpose of determining domestic top-up tax. Where the financial accounting net income or loss of the qualifying entity is determined in accordance with a local accounting standard, then if:

• all of the qualifying entities of the MNE group, large-scale domestic group or joint venture group, as the case may be, located in the State have financial statements prepared in accordance with a local accounting standard with a euro functional currency, then for the purposes of determining the domestic top-up tax of that qualifying entity, all calculations shall be made using the euro, and
• subparagraph (i) does not apply, then for the purposes of determining the domestic top-up tax of that qualifying entity, the filing constituent entity may elect, in accordance with section 111AAAD, that all calculations of the qualifying entities in the group are made using either:
  1. the presentation currency of the consolidated financial statements of the ultimate parent entity, or
  2. the euro,

(4)(b) Paragraph (b) provides that where the financial accounting net income or loss of a constituent entity is not calculated in accordance with a local accounting standard, for the purpose of determining the domestic top-up tax of a qualifying entity, all calculations shall be made using the presentation currency of the ultimate parent entity, using the currency translation rules under that financial accounting standard.

(4)(c) Paragraph (c) provides that where a qualifying entity is not a member of a group, all calculations made in determining the domestic top-up tax shall be made using the presentation currency of its qualifying financial statements.

(5)(a) Paragraph (a) provides that any payments required under this Part shall be paid in the currency of the State.

(5)(b) Paragraph (b) provides that an amount payable under this Part shall be converted to the currency of the State using the average representative rates of exchange of that other currency of the fiscal year or accounting period.

Relevant Date: Finance Act 2024